User Account

All Pages

How is the effective interest rate calculated

Assignment Help Accounting Basics
Reference no: EM132062809

Question - Under IFRS, we take out the bond issuance costs so the carrying amount is now 9,500,000, and the effective interest rate is determined to be 6.193% [$9,500,000 cash inflow on January 1, 2010; $500,000 cash outflow on December 31, 2010 - 2014; and $10,000,000 cash outflow on December 31, 2014].

Interest expense in 2010 is $588,335 [$9,500,000 x 6.193%]. Interest expense in 2011 is $593,806 [($9,500,000 + ($588,335 - $500,000)) x 6.193%]. The total reduction in retained earnings as of December 31, 2011 would be $1,182,141.

In 2011, IFRS income would be $6,194 [$600,000 - $593,806] larger than 05, GAAP income, Stockholders" equity at December 31, 2011 is $12,859 [$1,200,000 - $1,182,141] larger under IFRS than US. GAAP,

How is the effective interest rate calculated?

Reference no: EM132062809

Questions Cloud

What is the compound annual rate implied : What is the compound annual rate implied by this 17 percent rate charged for only two weeks?
How much would kennedy report for cost : If beginning finished goods inventory was $10,000 and COGS was $50,000, how much would Kennedy report for cost of goods manufactured
What is the expected rate of return on debt : Consider a company with book value of assets equal to 100. what is the expected rate of return on debt?
What are some successful models of using non-violence : What are some successful models of using non-violence and peaceful resistance as a tactic and strategy for obtaining power?
How is the effective interest rate calculated : Under IFRS, we take out the bond issuance costs so the carrying amount is now 9,500,000, How is the effective interest rate calculated
Finances project internally by using half of cash reserve : Suppose that the firm finances the project internally by using half of cash reserve. Construct the resulting balance sheet. Do shareholders accept or reject
What is your total return for the one year period : You purchased XYZ common shares for $45 per share one year ago. One year later aftering receiving $4 dividend per share, you sold your stock at $48 per share.
How much will you pay in principal during the first year : You have just purchased a home and taken out a $530,000 mortgage. The mortgage has a 30-year term with monthly payments and an APR of 4.64%.
What is the net present value of the given project : You purchased land 3 years ago for $84000 and believe its market value is now $93000. You are considering building a hotel on this land instead of selling it.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Compute the spending variance for catering supplies in march

The actual cost for catering supplies in March was $4,990. The spending variance for catering supplies in March would be closest to

  Sepracor inc a us drug company reported the following

sepracor inc. a u.s. drug company reported the following information. the company prepares its financial statements in

  Examine the economic effect of restatement

Examine the economic effect of restatement of the financial statements on investors, employees, customers, and creditors.

  Falquez company sells three products r s and t data for

falquez company sells three products r s and t. data for activity of falquez company during july are as follows

  Shown here are condensed income statements for two different

Shown here are condensed income statements for two different companies ( both are organized as LLCs and pay no income taxes).

  Company statement of cash flows

An increase in the bonds payable account of $200,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as:

  Register summary of frederickson company

According to a payroll register summary of Frederickson Company, the amount of employees' gross pay in December was $875,400, of which $88,700 was not subject to Social Security taxes of 6.2% and $769,800 was not subject to state and federal unemp..

  What is an audit confirmation

Confirmation Procedure. A CPA accumulates various types of evidence on which to base the opinion on financial statements.

  Prepare the statement of owner equity for boardwalk

The following is selected financial information for Sun Energy Company for the year ended December 31, 2011: revenues, $65,000; expenses, $50,000; net income.

  Reasoning of economic historians

Some economic historians have argued that the railroad companies charged lower prices to ship freight because they owned so much land along the tracks. Briefly explain the reasoning of these economic historians.

  What is the price of the bond

Yan Corp. has a 2,000 par value bond outstanding with a coupon rate of 4.9 percent paid semiannually, What is the price of the bond

  The predetermined manufacturing overhead rate of 14 per

costello corporation manufactures a single product. the standard cost per unit of product is shown belowdirect

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd